Shipowner group opposes change to salvage rules

Thursday, October 11, 2012

The International Chamber of Shipping (ICS), a shipowner group that says it represents over 80 percent of the world's merchant fleet, has reiterated its opposition to proposals from the International Salvage Union (ISU) for a new separate award for environmental salvage in cases where salvors have carried out work when a ship or cargo has presented a threat of damage to the environment.
ISU contends that while the International Convention on Salvage of 1989 does take account the salvor’s efforts to protect, avoid or minimize damage to the environment, it believes its members are not always fairly rewarded for their efforts and successes. ISU said that's because some casualties which threaten the environment are of low financial value.
The International Chamber of Shipping made its comments in advance of a meeting next week in Beijing of an international association of maritime lawyers called the Comité Maritime International (CMI).
“Salvage services are already generously rewarded under the present system,” said Matheos Los, ICS insurance committee chairman.
ISU maintains its proposal will allow for a “merit”-based award for salvors’ services to avoid or minimize damage to the environment which, they say, the present system does not provide.
However, ICS contends the IMO Salvage Convention and the Lloyd’s Open Form, which is based on the convention, already provide for a system that allows for recognition of environmental benefit. Together with the Special Compensation P and I Club Clause (SCOPIC) the current system "provides for a generous financial reward to salvors," the chamber said.
The Lloyd’s Open Form (LOF) is the most commonly used salvage contract, and has been in use for more than 100 years. The International Salvage Union supports and promotes the use of LOF, which is a “no cure, no pay” contract. ISU explained the LOF contract does not require the negotiation of fees for the proposed salvage services. Instead, once the services have been completed the contract provides for the salvor to receive an award based on clearly defined criteria set out in the convention, and limited by the salvage value of the ship, its cargo and bunkers.
ISU said in 1984, following high profile casualties of ships such as the Atlantic Empress, Christos Bitas and Amoco Cadiz, the salvage convention was modified to add criteria for assessing a salvage award by recognizing “the skill and efforts of the salvor in preventing or minimizing damage to the environment” and by creating a new concept called Special Compensation which the ISU noted was “introduced to ameliorate the harshness of the traditional ‘no cure, no pay’ rule by providing that a salvor would, subject to certain conditions, at least recover his expenses whenever there was a threat of damage to the environment.”
ISU said “SCOPIC is a tariff-based compensation mechanism designed to ensure that the salvor recovers, as a minimum, his expenses of providing services to a casualty, plus a fixed bonus, regardless of the degree of success.”
The chamber said ISU now “wishes to have a standalone environmental award in addition to the traditional property award. This would apparently be based on an assessment of the theoretical benefits of savings made to the environment.”
ICS said its concern “is that inevitably such an award would require the introduction of expert evidence with complicated tools, as has been seen in US Natural Resource Damage Assessment cases. Such an assessment would not only prove complicated and costly but would ultimately prolong the awards process."
“Such a complicated and drawn out process would be in no one’s interest, not least the salvors, who in any event have previously expressed great satisfaction with the current SCOPIC regime.” Los said.
At the Beijing meeting, ICS said it will also resist changes proposed to the York Antwerp Rules governing General Average, saying “there are some serious concerns about the need for a revision at all, particularly in the present economic situation when shipowners are facing strong pressures."
“Any revision could destroy the uniform global regime that has developed and is presently provided very effectively by the 1994 York Antwerp Rules.” Los said. - Chris Dupin